Concerns Over Intel's PCs, Severs Lead To A $37 Price Target At Summit

Worldwide PC shipments declined in C1Q16 to 64.8 million units, according to Gartner estimates, and to 60.6 million units as per IDC estimates. WR Hambrecht’s Srini Sundararajan maintained a Buy rating for Intel Corporation INTC, while reducing the price target from $38 to $37.

Declining PC shipments and the poor response received by Taiwanese PCODMs in January are expected to impact the company’s 1Q and 2Q performance, analyst Srini Sundararajan said.

Declining PC And HDD Demand Concern Areas

Declining PC shipments would adversely impact Intel’s Client Computing Group or CCG revenues. Sundararajan added that weak HDD demand, as indicated by Seagate Technology PLC STX and Super Micro Computer, Inc. SMCI, raise potential DCG worries.

The analyst expects Intel to revise its 2016 capex and revenue guidance for 2016. The company’s new reporting structure is expected to have different segments like Client Computing [CCG], Data Center [DCG], Internet of Things [IOTG], Non-Volatile Memory Solutions [NSG], Intel Security [ISecG], Programmable Solutions [PSG] and all other - New Technology [NTG].

The EPS estimates for 1Q16 and 2016 have been reduced from $0.45 to $0.44 and from $2.35 to $2.30, respectively.